Texas homeowners and business owners are set for sweeping property tax relief after voters approved a pair of constitutional amendments aimed at easing one of the state’s most persistent financial burdens.
The measures, passed Tuesday, raise the homestead exemption for school district taxes and expand tax breaks for business inventory — changes that could reshape local revenue streams across the state, the Texas Tribune reported.
The centerpiece of the package increases the state’s homestead exemption — the portion of a home’s value shielded from school property taxes — from $100,000 to $140,000. That translates to roughly $490 in annual savings for the owner of a typical $302,000 Texas home, according to the outlet.
Seniors and homeowners with disabilities will see even larger cuts, following voter approval of a separate measure targeting those groups.
Businesses also won big. Voters approved a state constitutional amendment exempting up to $125,000 of a company’s inventory from property taxes levied by school districts, cities and counties. Supporters argued the change will ease pressure on small and midsize firms, which have struggled with rising valuations and tight margins in recent years.
“There is an absolute recognition of the need to provide property tax cuts for homeowners and business owners,” said state Sen. Paul Bettencourt, the Houston Republican who led the push. “The public embraces the idea that increasing homestead exemptions is a way to keep people in their homes and to lower their property tax bills.”
The Texas plan mirrors efforts in other GOP-led states such as Iowa, Florida and Georgia to cut property taxes amid rising home values. Those states pursued similar strategies, while California and Colorado are exploring different approaches to easing the tax burden on homeowners, such as annual increase caps.
The state has committed an estimated $51 billion over the next two years to offset those cuts, using surplus funds to reduce school district tax rates and backfill revenue lost to exemptions.
But some fiscal analysts warn that tying the changes to the state constitution could limit future flexibility if revenues dip. Unlike temporary rate adjustments, these tax breaks can’t be rolled back without another statewide vote — meaning lawmakers would need to cut other spending if the budget tightens.
For cities and counties, the impact could be even sharper. While the state will cover lost school district revenue, local governments that tax business inventories will have to raise rates or pare down budgets to fill the gap.
— Eric Weilbacher
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